The EUR to CHF exchange rate shows a bearish bias in the near term.
Key drivers include:
- The European Central Bank (ECB) has maintained a cautious stance, keeping interest rates on hold, which contrasts with Switzerland's recent rate cut to address falling inflation.
- The Swiss National Bank's (SNB) strong response to the appreciating franc and its potential consideration of reintroducing negative rates raises questions on future CHF strength.
- European economic growth projections are positive, but geopolitical tensions, especially relating to the war in Ukraine, continue to weigh on the euro.
Near-term, the EUR/CHF rate is expected to trade within a stable range, reflecting current momentum.
An upside risk could emerge if the ECB signals a more aggressive monetary stance to combat inflation. Conversely, a downside risk exists if geopolitical tensions escalate, potentially leading to further currency fluctuations and impacting the euro's appeal.
